In 2011 the EIA released a report
that reviewed US shale oil and gas reserves. It stated that the largest
shale oil formation in America was the Monterey play in Southern
California. The report estimated that the Monterey shale formation held
15.5 billion barrels of oil or 64% of total U.S. shale oil reserves.

California's vast shale deposits were labelled ''black gold'' due to this forecast. On the basis of this rosy review the University of California produced a report forecasting millions of new jobs and billions in extra tax revenues.

Such academic reports have played a part in encouraging the media frenzy
that has tried desperately to promote fracking to the American people
as a clean, safe industry that will create jobs, foster a renaissance in
manufacturing industry, increase tax revenues and help America be
independent of supplies from its geopolitical enemies.

On top of this, American imperialism is using these
inflated claims for its energy reserves to advance its geopolitical
interests. The Obama administration are using the crisis in Ukraine to
put pressure on their puppet allies in the EU to wean themselves off
Russian gas and buy American fracking gas in the future.

At a press briefing before Obama's June trip to Poland, Belgium and
France Deputy National Security Advisor for Strategic Communications Ben Rhodes said:

Frankly, the Ukraine crisis has brought into
sharp relief Europe’s energy dependence on Russia, so we are going to
work closely with our European allies on the importance of both short-
and long-term efforts to diversify their energy sources, to modernize
their infrastructure, and to limit Russia’s ability to use energy as a
tool of political leverage.

The big gas companies are
drooling at the prospect of selling fracking gas abroad. There are two
bills before Congress that hope to fast track exports of liquefied gas:
Senate Bill 2274 and House Bill 6. Obviously, the gas corporations don't
care two figs for the energy supplies of Europe but they do want to
sell fracking gas abroad. They can get a much higher price in Europe
than they can get domestically. This means a huge increase in profits.

The 96% downgrade of recoverable oil reserves from the Monterey shale
formation which were supposed to represent two-thirds of America's shale
oil reserves is big news. However, this news was overshadowed by the
giant mega gas deal between Russia and China that came out the same day.

Industry Response

You will not find any corporate politician or mainstream media outlet
that will discuss the significance of the Monterey shale oil downgrade.
The oil industry itself tries to brush off the significance of this
downgrade by the EIA.

Industry spokespeople claim that big oil has far from given up on the
prospect of extracting tight oil in California through multi-stage
horizontal fracking. They have vowed to continue to find ways to extract
tight oil in California. In a recent statement Catherine Reheis-Boyd,
President of the Western States Petroleum Association said:

We have a great deal of confidence that the
skill, experience and innovative spirit possessed by the men and women
of the petroleum industry will ultimately solve this puzzle and improve
production rates from the Monterey Shale.

Reality Check

If we put industry propaganda to one side, the reality is that this
downgrade represents a huge blow to the fracking industry. Not only
them, but also to the capitalist politicians in Congress, who put such
great hopes on oil and gas from fracking.

"The cost-benefit analysis of fracking in California has just changed drastically."

Referring
to the 96 percent reduction, she asks, "Why put so many at risk for so
little? We now know that the projected economic benefits are only a
small fraction of what the oil industry has been touting. There is no
ocean of black gold that fracking is going to release tomorrow, leaving
California awash in profits and jobs.

The downgrade of the Monterey should raise
questions about the veracity of the EIA’s other estimates, especially
considering their past track record with other plays (notably the
Marcellus). It should put the so-called “shale revolution” into
perspective, particularly because the typical life cycle of a shale play
appears to be very short.

Statistical Fantasy

Tom Whipple,
a highly respected peak oil analyst, has cast doubt on the new revised
figure of 600 million barrels, ''which in itself may be high.''

J.David Hughes, geologist, has extensively studied the Monterey shale
formation. He produced a study in 2013 which showed the EIA's 2011
forecast was vastly overstated. “The oil
had always been a statistical fantasy. Left out of all the hoopla was
the fact that the EIA’s estimate was little more than a
back-of-the-envelope calculation.”

In 2013 Hughes produced the most comprehensive analysis to date of
prospects for shale gas and tight oil in the United States. His landmark
Drill Baby Drill
report seriously undermines the media myth that the United States is on
the verge of becoming an energy superpower that will rival Saudi Arabia
and Russia. Hughes has noted the significance of the massive downgrade
in recoverable oil reserves in California.

"Monterey
was a huge field wiped out with a stroke of a pen: That's like two
Bakkens off the table in one fell swoop,'' Hughes said. "You're going to
have a whole slew of poorly producing wells in a decade or so. The good
news is that supply grows short term, but the bad news is that we may
have a very serious supply issue 10-15 years out."

The economics of fracking just does not add up

The American people need to be made aware that the oil and gas fracking
industry will not deliver on its promises of a jobs boom that will
foster a manufacturing renaissance and deliver higher tax receipts. The
economics of fracking just does not add up.

Healthesound.info

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